Women’s Financial Inclusion: Are Funders Moving the Needle?

The sustainable development agenda’s focus on gender equality and women’s empowerment is a testament to the importance many development donors and investors place on gender issues today.

The 2017 CGAP Cross-Border Funder Survey shows that gender issues are also a priority for financial inclusion funders. Eighteen out of the 23 largest funders participating in the survey reported at least one project focused on women’s economic empowerment. In total, this theme was an explicit objective in 223 (9 percent) of the surveyed funders’ projects in 2016. These projects were spread across 27 low-income and lower middle-income countries and totaled $2.4 billion in active commitments.

But what impact are these international donor funds having on the gender gap? Our most recent survey data suggest an answer.

Funders are prioritizing countries where woman are more financially excluded

Half of all funding for women’s financial inclusion goes to countries where less than 40 percent of women own a financial account, and 80 percent is allocated to countries where less than 59 percent have accounts (the average in developing countries). Overall, close to 80 percent of funding goes to low- and lower-middle income countries.

Our data also suggest that these interventions mainly focus on improving women’s access to credit by helping financial services providers (FSP) finance their loan portfolios. Another common focus area is improving women’s financial literacy and financial education.

Overall, funder efforts to improve women’s financial access use the same mix of instruments as any other interventions without much adjustment. Two-thirds of the funding with a gender dimension is channeled as debt to finance the loan portfolios of FSPs. A quarter of the funding is channeled as grants, typically from bilateral and multilateral agencies trying to promote financial literacy and financial education for women as part of the financially excluded population.

Yet, funder support hasn't resulted in much progress in addressing the gender gap

Looking at Findex data from 2014 and 2017, we see that only two out of the top seven funded countries for women’s economic empowerment have narrowed the gender gap in account ownership. Cambodia has managed to close the gap entirely, and India has dramatically lowered the gender gap from 20 to 6 percentage points. For the rest of the top-funded countries, the gap has widened — ranging from 2 percentage points in Egypt to 20 percentage points in Bangladesh. In fact, Bangladesh, Benin, Burkina Faso, Ethiopia and Jordan have seen the biggest expansion of the gender gap, despite representing close to 15 percent of funder commitments for women’s economic empowerment. On the other hand, countries like Bolivia, Guatemala, Kosovo and Myanmar have shown the greatest progress toward bridging the gender gap despite being among the smallest recipients of international funding for women’s economic empowerment, with less than 1 percent of the total funding.

Account ownership gender gap in countries with largest funder commitments to projects with a gender focus

What's next?

The mixed results from our analysis bring into question whether funders are truly to be credited for the progress or regress that countries are making in women’s financial inclusion. For example, in the case of India, where the gender gap narrowed substantially, the Indian government has driven policies to help women obtain basic accounts and created the Unified Payment Interface. Did funders influence these policy changes? What about the case of Myanmar? Even if the volume of funding were much lower, did funders help countries focus on the right priorities that contributed to bridging the gender gap?

Clearly, more progress and research are needed to eliminate the gender gap in financial inclusion. Mayada El-Zoghbi suggests in her blog post, “Measuring Women’s Financial Inclusion: The 2017 Findex Story” perhaps the financial inclusion community has prioritized the wrong barriers. Access to credit may be a need for many women, but funders encouraging FSPs to offer this service may just not be the answer. There are other reasons why women remain financially excluded, such as social and cultural norms, as well as policy and regulation. It is perhaps time for funders to also focus on these issues to achieve meaningful progress.